U.S. stocks in freefall

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riptide
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Re: U.S. stocks in freefall

Post by riptide » Tue Oct 14, 2014 9:30 am

Ignatious P. Daily wrote:
riptide wrote:I lost $10,000 in the last 3 weeks! I am trying to just stay the course!! :shock:


Down $35k. Been contributing 100% of my income contributions to equities to stay balanced. During the bull run I was contributing 100% to bonds to stay balanced. Seems to me the system is working as intended. Try to remember that you OWN BUSINESSES. Way too many people treat equity ownership like trading baseball cards. I interact with 100's of products per day that are made, serviced, and delivered by companies that I own.

A question to ponder... If you ran a painting business, would you suddenly want to sell it because someone walked into your office and offered to buy your business for less than an offer you received 6-months ago?!?! I don't know any rational person who would. So, explain to me why it should be different with equities?!


Thanks for the encouragement !
Y
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Re: U.S. stocks in freefall

Post by Ignatious P. Daily » Tue Oct 14, 2014 9:41 am

avalpert wrote:Really? You don't know any rational person that could have experienced a change in business conditions that make their business worth less than six months earlier and make the price at which they would sell less?

If that is truly the case than I suspect you don't know any rational people.


What change in business conditions? I see earnings coming in very strong. I see macro metrics making minor moves either positive or negative. I see no evidence of a large change in business conditions... Further, I see no evidence that an individual will be able to get knowledge of a large change in business conditions before it is widely known.

So please help me understand your point.

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Re: U.S. stocks in freefall

Post by dgdevil » Tue Oct 14, 2014 9:45 am

Up 7-8% this year in retirement accounts, thanks to large healthcare exposure, and moving one-third into cash in early September.

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Re: U.S. stocks in freefall

Post by DonCamillo » Tue Oct 14, 2014 9:54 am

beammeupscotty wrote:
axxs wrote:can somebody make a projection of what the s&p valuation should be if it had grown at a steady rate of 8 or 9% a year since 1995 instead of the roller coaster ride it has been?of course lets not forget the shenenigans america's been thru the last 15 years,one stock market bubble,one housing bubble,a very expensive war and rising china....i think america's growth should actually be at 3 to 4% a year instead.

Well, the S&P 500 actually did have a CAGR of 9% since 1995.

I had my dad put his equity money in the Vanguard 500 Index Fund in 1995. It worked out well for him, even better than you show, because he had Admiral shares, not Investor shares.

Since I was a young stock picking, market timing genius with expertise in technology, I invested in individual stocks instead. That did not work out too well for me, especially in 2000 to 2003. If I had put my money where I had my Dad put his, my retirement assets would be more than double what they are today.

I paid my tuition, learned my lessons, got my degree from the School of Hard Knocks, and became a Boglehead. But I think some young investors are not willing to learn from the experience of others, and have to pay their own tuition. At least if they are young when they try market timing, they might learn their lessons before they have too much to lose.
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Re: U.S. stocks in freefall

Post by avalpert » Tue Oct 14, 2014 10:33 am

Ignatious P. Daily wrote:
avalpert wrote:Really? You don't know any rational person that could have experienced a change in business conditions that make their business worth less than six months earlier and make the price at which they would sell less?

If that is truly the case than I suspect you don't know any rational people.


What change in business conditions?

Your question was a generic hypothetical - not one of a painting business specifically operating today. And even then, an individual business could certainly have a change in conditions that would warrant selling for less (just ask those who owned GTAT).

My point is really simple - your question you asked to ponder has a very easy answer and it wasn't the one you asserted 'any rational person you know' would provide.

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Re: U.S. stocks in freefall

Post by Ignatious P. Daily » Tue Oct 14, 2014 10:52 am

avalpert wrote:Your question was a generic hypothetical - not one of a painting business specifically operating today. And even then, an individual business could certainly have a change in conditions that would warrant selling for less (just ask those who owned GTAT).

My point is really simple - your question you asked to ponder has a very easy answer and it wasn't the one you asserted 'any rational person you know' would provide.


Thank you for telling me what the intent of my question was, and for responding based on that assumption. It is a case study in a break-down in communication. The words I used were chosen with intent to communicate my point within scope. Only the offer price changed in my simple illustration. You argued that business conditions are changing, and I took that - given the thread topic - to relate to current equity markets. I sought to educate you that those variables haven't moved much, and if they did, you would be very unlikely to know it before it was widely understood. So then you persist, arguing against a point I did not make.

[personal comment and followups removed by admin alex]

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Re: U.S. stocks in freefall

Post by Clearly_Irrational » Tue Oct 14, 2014 10:55 am

dgdevil wrote:So 1860 looks to be toast on current momentum?


That's not what I was saying.

dgdevil wrote:Do you see some range-trading in that area before it drops to the next support level?


I expect a short retracement before further declines.

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Re: U.S. stocks in freefall

Post by dgdevil » Tue Oct 14, 2014 11:11 am

Clearly_Irrational wrote:
dgdevil wrote:So 1860 looks to be toast on current momentum?


That's not what I was saying.


Sorry. Did not mean to imply that. That was my rudimentary analysis.

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Re: U.S. stocks in freefall

Post by Alex Frakt » Tue Oct 14, 2014 12:11 pm

I've had to remove a few posts. Personalizing disputes is not acceptable on this forum. Neither is counterattacking if you see someone else doing it. From the forum policies:

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Re: U.S. stocks in freefall

Post by placeholder » Tue Oct 14, 2014 5:16 pm

Regal 56 wrote:Obviously Mr. Market knows this, and decided to get his licks in now when it hurts me more. By the way, if this downturn is hurting others besides me, please accept my sincere apology. You’re not the target of Mr. Market’s ire. It’s me he’s after. Everyone else is collateral damage.

Hey don't be trying to take credit for my downturn because as I mentioned in the 300 point thread I'm in the process of moving assets to capture a transfer bonus and value of the ETFs is close to dipping to the point where I would need to plus it up with cash.

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Re: U.S. stocks in freefall

Post by ofcmetz » Wed Oct 15, 2014 11:19 am

Headed for another big down day. Gains for the year just about wiped out for US large caps. Anybody hitting their rebalance bands?

Hang in there everyone.
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Re: U.S. stocks in freefall

Post by DVMResident » Wed Oct 15, 2014 11:49 am

ofcmetz wrote:Headed for another big down day. Gains for the year just about wiped out for US large caps. Anybody hitting their rebalance bands?

Hang in there everyone.


Yup! Just got Q3 match in company stock. Sold all and rebalanced into AA.
Lucky timing. Feeling great. Good time to buy.

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Re: U.S. stocks in freefall

Post by columbia » Wed Oct 15, 2014 12:01 pm

Shouldn't this be "world stocks?"

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Re: U.S. stocks in freefall

Post by garlandwhizzer » Wed Oct 15, 2014 12:27 pm

The last 5 years has been up to now a consistent uninterrupted bull market which historically is overdue for a correction and has been for some time. US small cap stocks are already in correction territory (>10% drop from highs). US large cap stocks still haven't hit correction territory although they certainly might. Corrections are a standard part of equity market action and serve some positive long term purposes: ridding market participants of complacency and overoptimism, reducing overvaluations and thus improving underlying equity fundamentals. Corrections in the absence of a bear market can be healthy for a long term bull market by preventing bubbles and moving investment dollars from weak hands (who sell) into strong ones (who hold on). In short if our current situation is a correction that does not lead into a bear market (>20% drop from highs) there is little if any damage for long term buy and hold investors. Another important function of stock downdrafts is to remind us of the importance of bonds in a portfolio and a well thought out asset allocation in line with our risk tolerance.

Are we going into a bear market which is a more serious event, doing more damage and lasting longer? No one knows with certainty, but I believe not. Bear markets are generally associated with recessions and increasing unemployment. Data in aggregate suggests that a recession is not on the horizon in the US. Continuing GDP growth and improving employment numbers suggest that our economy slowly strengthening not weakening in spite of a few weak reports today. In short panic is not in order, rebalancing maybe, although personally I believe that higher rebalancing bands are more productive than lower ones. I'm staying the course.

Garland Whizzer

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Re: U.S. stocks in freefall

Post by scone » Wed Oct 15, 2014 12:33 pm

ofcmetz wrote:Headed for another big down day. Gains for the year just about wiped out for US large caps. Anybody hitting their rebalance bands?

Hang in there everyone.


Maybe by the end of the next day or two. I was at 27% stock this morning, and I have to get to 25%, that's my lower band. If so, it will be the first time I've had to rebalance from stocks to bonds, and then from bonds to stocks, in a single year. I'm actually excited about buying more shares at a lower price.

Also, my Treasuries have hit the ceiling, or the floor, depending on how you look at it. Thank you Larry Swedroe!
"My bond allocation is the amount of money that I cannot afford to lose." -- Taylor Larimore

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Re: U.S. stocks in freefall

Post by protagonist » Wed Oct 15, 2014 1:57 pm

I can't do any significant rebalancing. I allowed my equities to grow considerably in the past when I didn't know any better. Rebalancing now would make me lose Romneycare (to be morphed into Obamacare) and cost me several thousand dollars a year in premiums, plus a large tax bill. I will probably rebalance sometime in the future when I am eligible for Medicare. I don't see this as a significant liability. When any money comes in (eg via end of the year distributions), I add it to fixed income. My tax lots all have significant gains and so it is very rare that I get to tax loss harvest. That's a drag. Tax loss harvesting would be nice.

If I rebalanced anyway would I do a little better? I don't know. I'm doing fine. It's one less thing I need to think about for now.

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Re: U.S. stocks in freefall

Post by technovelist » Wed Oct 15, 2014 2:03 pm

protagonist wrote:I can't do any significant rebalancing. I allowed my equities to grow considerably in the past when I didn't know any better. Rebalancing now would make me lose Romneycare (to be morphed into Obamacare) and cost me several thousand dollars a year in premiums, plus a large tax bill. I will probably rebalance sometime in the future when I am eligible for Medicare. I don't see this as a significant liability. When any money comes in (eg via end of the year distributions), I add it to fixed income. My tax lots all have significant gains and so it is very rare that I get to tax loss harvest. That's a drag. Tax loss harvesting would be nice.

If I rebalanced anyway would I do a little better? I don't know. I'm doing fine. It's one less thing I need to think about for now.


So you don't have any room in the 15% (0%) LTCG bracket? Would it affect your eligibility for Romneycare if you did?
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Re: U.S. stocks in freefall

Post by Toons » Wed Oct 15, 2014 2:09 pm

riptide wrote:I lost $10,000 in the last 3 weeks! I am trying to just stay the course!! :shock:


How could you lose it if you never realized it :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: U.S. stocks in freefall

Post by ArthurO » Wed Oct 15, 2014 2:28 pm

Toons wrote:
riptide wrote:I lost $10,000 in the last 3 weeks! I am trying to just stay the course!! :shock:


How could you lose it if you never realized it :happy


this is the most ridiculous statement I've read yet, just because you don't have less in your wallet but you have less in your account doesn't mean that you don't have less, you just have less in different terms... realized or not, it is just semantics

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Re: U.S. stocks in freefall

Post by cusetownusa » Wed Oct 15, 2014 2:50 pm

The title of this thread must be true...I just had a coworker walk by my office and state that the "the market basically collapsed today...this is why I invest in bitcoins, the only hedge against stock market crashes that I know of."

I asked him what defines crash and how much did the market go down...he said not sure but its down around 400 points and black friday it dropped around 700 points...plus its down over 700 points for the week.

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Re: U.S. stocks in freefall

Post by Toons » Wed Oct 15, 2014 2:51 pm

ArthurO wrote:
Toons wrote:
riptide wrote:I lost $10,000 in the last 3 weeks! I am trying to just stay the course!! :shock:


How could you lose it if you never realized it :happy


this is the most ridiculous statement I've read yet, just because you don't have less in your wallet but you have less in your account doesn't mean that you don't have less, you just have less in different terms... realized or not, it is just semantics


Now,now Arthur,,be civil and kind :happy
All he "owns" is an unrealized loss :sharebeer
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Re: U.S. stocks in freefall

Post by kenyan » Wed Oct 15, 2014 2:51 pm

garlandwhizzer wrote:The last 5 years has been up to now a consistent uninterrupted bull market which historically is overdue for a correction and has been for some time.

Garland Whizzer


I don't disagree with most of your post, but what about 2011? Peak-to-trough was -19% in TSM, -17.5% S&P 500.
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Re: U.S. stocks in freefall

Post by DonCamillo » Wed Oct 15, 2014 3:11 pm

kenyan wrote:
garlandwhizzer wrote:The last 5 years has been up to now a consistent uninterrupted bull market which historically is overdue for a correction and has been for some time.

Garland Whizzer


I don't disagree with most of your post, but what about 2011? Peak-to-trough was -19% in TSM, -17.5% S&P 500.

I really loved 2011. Bought a condo in Florida in a foreclosure auction at the beginning of February, moved the money to pay for it into cash to be ready for a closing at any time. The bank that foreclosed could never get their paperwork together and the sale finally fell through after a few months. Went back into the market at much lower prices in August. I love to tell people that I made a bundle on a condo that I didn't buy! :beer
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Re: U.S. stocks in freefall

Post by surfstar » Wed Oct 15, 2014 3:13 pm

From a Yahoo headline article: "Stocks suffered their biggest losses in years and the dollar slumped on Wednesday..."

S&P ended down ~0.8% :oops:

If that's a big deal, we have it pretty good.

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Re: U.S. stocks in freefall

Post by riptide » Wed Oct 15, 2014 3:26 pm

Toons wrote:
ArthurO wrote:
Toons wrote:
riptide wrote:I lost $10,000 in the last 3 weeks! I am trying to just stay the course!! :shock:


How could you lose it if you never realized it :happy


this is the most ridiculous statement I've read yet, just because you don't have less in your wallet but you have less in your account doesn't mean that you don't have less, you just have less in different terms... realized or not, it is just semantics


Now,now Arthur,,be civil and kind :happy
All he "owns" is an unrealized loss :sharebeer


Thanks Toons for helping me realize that I own an 'unrealized loss' ! :beer
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Re: U.S. stocks in freefall

Post by garlandwhizzer » Wed Oct 15, 2014 3:30 pm

kenyan wrote:
I don't disagree with most of your post, but what about 2011? Peak-to-trough was -19% in TSM, -17.5% S&P 500.


You're right. That one slipped my aging mind. Thanks for the correction.

Garland Whizzer

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Re: U.S. stocks in freefall

Post by Toons » Wed Oct 15, 2014 4:00 pm

riptide wrote:
Toons wrote:
ArthurO wrote:
Toons wrote:
riptide wrote:I lost $10,000 in the last 3 weeks! I am trying to just stay the course!! :shock:


How could you lose it if you never realized it :happy


this is the most ridiculous statement I've read yet, just because you don't have less in your wallet but you have less in your account doesn't mean that you don't have less, you just have less in different terms... realized or not, it is just semantics


Now,now Arthur,,be civil and kind :happy
All he "owns" is an unrealized loss :sharebeer


Thanks Toons for helping me realize that I own an 'unrealized loss' ! :beer


Exactly.I can recall having many unrealized losses in mutual funds years and years ago.I still have those funds and those unrealized losses have all turned into unrealized gains,,,,,Stay the course and has been repeated over and over ,try not to look at the fund performance so frequently.They are meant to be held for years if not decades. :sharebeer :sharebeer
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: U.S. stocks in freefall

Post by ArthurO » Wed Oct 15, 2014 4:02 pm

Toons wrote:
ArthurO wrote:
Toons wrote:
riptide wrote:I lost $10,000 in the last 3 weeks! I am trying to just stay the course!! :shock:


How could you lose it if you never realized it :happy


this is the most ridiculous statement I've read yet, just because you don't have less in your wallet but you have less in your account doesn't mean that you don't have less, you just have less in different terms... realized or not, it is just semantics


Now,now Arthur,,be civil and kind :happy
All he "owns" is an unrealized loss :sharebeer


a loss is a loss, of course, of course..... it is crazy I see so many threads discussing market loses, and people pretty much accept these, but when there are threads about people trying to buy things and actually enjoy the money, there seems to be so much resistance....

realized, unrealized, you lost 10k, get on with your life... stop crying... and talking about staying the course, just invest and accept you are going to lose some... i lost 50K in last week and you don't see me looking for reassurance... from anyone, because no one is you, and no one can reassure you, if you are not comfortable, your asset allocation is not where it should be.... period.

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Re: U.S. stocks in freefall

Post by Toons » Wed Oct 15, 2014 4:06 pm

ArthurO wrote:
Toons wrote:
ArthurO wrote:
Toons wrote:
riptide wrote:I lost $10,000 in the last 3 weeks! I am trying to just stay the course!! :shock:


How could you lose it if you never realized it :happy


this is the most ridiculous statement I've read yet, just because you don't have less in your wallet but you have less in your account doesn't mean that you don't have less, you just have less in different terms... realized or not, it is just semantics


Now,now Arthur,,be civil and kind :happy
All he "owns" is an unrealized loss :sharebeer


a loss is a loss, of course, of course..... it is crazy I see so many threads discussing market loses, and people pretty much accept these, but when there are threads about people trying to buy things and actually enjoy the money, there seems to be so much resistance....

realized, unrealized, you lost 10k, get on with your life... stop crying... and talking about staying the course, just invest and accept you are going to lose some... i lost 50K in last week and you don't see me looking for reassurance... from anyone, because no one is you, and no one can reassure you, if you are not comfortable, your asset allocation is not where it should be.... period.


50K,,,Thats all?
:sharebeer Cheers
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Re: U.S. stocks in freefall

Post by ArthurO » Wed Oct 15, 2014 4:10 pm

Toons wrote:Now,now Arthur,,be civil and kind :happy
All he "owns" is an unrealized loss :sharebeer


a loss is a loss, of course, of course..... it is crazy I see so many threads discussing market loses, and people pretty much accept these, but when there are threads about people trying to buy things and actually enjoy the money, there seems to be so much resistance....

realized, unrealized, you lost 10k, get on with your life... stop crying... and talking about staying the course, just invest and accept you are going to lose some... i lost 50K in last week and you don't see me looking for reassurance... from anyone, because no one is you, and no one can reassure you, if you are not comfortable, your asset allocation is not where it should be.... period.[/quote]

50K,,,Thats all?
:sharebeer Cheers[/quote]

do you care to share your loses? I am curious now...

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Re: U.S. stocks in freefall

Post by Leif » Wed Oct 15, 2014 4:16 pm

Its interesting to see this thread cycle between sleep and waking up. I am a bit nervous posting on this thread. I'm afraid it may keep popping up for the next several years in my View Your Posts.
Last edited by Leif on Thu Oct 16, 2014 12:05 am, edited 2 times in total.
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Re: U.S. stocks in freefall

Post by ruralavalon » Wed Oct 15, 2014 4:21 pm

DonCamillo wrote: I really loved 2011. Bought a condo in Florida in a foreclosure auction at the beginning of February, moved the money to pay for it into cash to be ready for a closing at any time. The bank that foreclosed could never get their paperwork together and the sale finally fell through after a few months. Went back into the market at much lower prices in August. I love to tell people that I made a bundle on a condo that I didn't buy! :beer

Thanks for the great story :D .

It helps to keep everything in perspective. Its sometimes hard to predict when an apparent negative (missed condo bargain) will turn out to be a blessing (buying stocks at "on-sale" prices).
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Re: U.S. stocks in freefall

Post by DonCamillo » Wed Oct 15, 2014 7:42 pm

ArthurO wrote:a loss is a loss, of course, of course..... it is crazy I see so many threads discussing market losses, and people pretty much accept these, but when there are threads about people trying to buy things and actually enjoy the money, there seems to be so much resistance....

An unrealized loss is total nonsense. All a market price shows is the price that the most motivated seller is willing to offer a stock for. The reason that I hold the stocks I do is that I do not find the current price offered attractive enough to motivate me to sell my stocks. Since MOST of the shares of stock in the world are not bought or sold on any given day, that means that MOST share owners also feel that their stocks are worth more to them than the market is currently offering. If the vast majority of stock owners feel that their stocks are worth more than the market is offering, I am inclined to agree with them.

Look at a proposed buyout, such as the proposed CP purchase of CSX. The price is always much higher than the market price, because a buyer has to offer a price that most shareholders will accept, not the lowest price that anyone will accept. That proves that the market price is a minimum value, not the real value.
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Re: U.S. stocks in freefall

Post by ArthurO » Wed Oct 15, 2014 7:50 pm

DonCamillo wrote:
ArthurO wrote:a loss is a loss, of course, of course..... it is crazy I see so many threads discussing market losses, and people pretty much accept these, but when there are threads about people trying to buy things and actually enjoy the money, there seems to be so much resistance....

An unrealized loss is total nonsense. All a market price shows is the price that the most motivated seller is willing to offer a stock for. The reason that I hold the stocks I do is that I do not find the current price offered attractive enough to motivate me to sell my stocks. Since MOST of the shares of stock in the world are not bought or sold on any given day, that means that MOST share owners also feel that their stocks are worth more to them than the market is currently offering. If the vast majority of stock owners feel that their stocks are worth more than the market is offering, I am inclined to agree with them.

Look at a proposed buyout, such as the proposed CP purchase of CSX. The price is always much higher than the market price, because a buyer has to offer a price that most shareholders will accept, not the lowest price that anyone will accept. That proves that the market price is a minimum value, not the real value.


I wish you luck getting more than the market value for your holdings when you are ready to sell, and good luck finding out what the company is actually worth... this is the most ridiculous thing I've ever heard, I got news for you, at any given moment whatever your value of your holdings in your account is, that's how much you will get when you are ready to sell, minus the fees if any, this mambo jumbo about real value and unrealized gains and losses is simply a mind game to justify and pacify market drops...

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Re: U.S. stocks in freefall

Post by Regal 56 » Wed Oct 15, 2014 8:07 pm

placeholder wrote:
Regal 56 wrote:Obviously Mr. Market knows this, and decided to get his licks in now when it hurts me more. By the way, if this downturn is hurting others besides me, please accept my sincere apology. You’re not the target of Mr. Market’s ire. It’s me he’s after. Everyone else is collateral damage.

Hey don't be trying to take credit for my downturn because as I mentioned in the 300 point thread I'm in the process of moving assets to capture a transfer bonus and value of the ETFs is close to dipping to the point where I would need to plus it up with cash.

Hey, you want it, you can have it with my blessing. I’ve been losing sleep over being the cause of this market downturn.

kenyan wrote:...but what about 2011? Peak-to-trough was -19% in TSM, -17.5% S&P 500.

It surprises me that so few people seem to recall it. I suppose after the 2008 and early 2009 train wreck, 2011 barely moved the needle for financial angst.

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Re: U.S. stocks in freefall

Post by Sidney » Wed Oct 15, 2014 8:10 pm

DonCamillo wrote:An unrealized loss is total nonsense.

Not if it is in a taxable account. Harvest!
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Re: U.S. stocks in freefall

Post by avalpert » Wed Oct 15, 2014 8:41 pm

DonCamillo wrote:Since MOST of the shares of stock in the world are not bought or sold on any given day, that means that MOST share owners also feel that their stocks are worth more to them than the market is currently offering.

It also means that MOST non share owners don't feel the stock is worth what those share owners think it is worth - and there are a lot more of them. Maybe you should be more inclined to agree with them - unless you think you are smarter than the market and thus know the value better than it does. If you don't think you are smarter than it in the short term and thus able to time your purchases and sales of equities/funds/markets why do you think you are smarter than it in the long term?

That proves that the market price is a minimum value, not the real value.

Not at all, all that proves is that in those cases there is a market buyer who values it more than the last buyer - heck that is what it means every time the next sale is higher. The real value at any given moment is what you can sell it for - plain and simple.
Last edited by avalpert on Wed Oct 15, 2014 8:54 pm, edited 1 time in total.

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Re: U.S. stocks in freefall

Post by technovelist » Wed Oct 15, 2014 8:44 pm

avalpert wrote:
DonCamillo wrote:Since MOST of the shares of stock in the world are not bought or sold on any given day, that means that MOST share owners also feel that their stocks are worth more to them than the market is currently offering.

It also means that MOST non share owners don't feel the stock is worth what those share owners think it is worth - and there are a lot more of them. Maybe you should be more inclined to agree with them - unless you think you are smarter than the market and thus know the value better than it does. If you don't think you are smarter than it in the smart term and thus able to time your purchases and sales of equities/funds/markets why do you think you are smarter than it in the long term?

That proves that the market price is a minimum value, not the real value.

Not at all, all that proves is that in those cases there is a market buyer who values it more than the last buyer - heck that is what it means every time the next sale is higher. The real value at any given moment is what you can sell it for - plain and simple.


Exactly.
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Re: U.S. stocks in freefall

Post by ArthurO » Wed Oct 15, 2014 10:19 pm

technovelist wrote:
avalpert wrote:
DonCamillo wrote:Since MOST of the shares of stock in the world are not bought or sold on any given day, that means that MOST share owners also feel that their stocks are worth more to them than the market is currently offering.

It also means that MOST non share owners don't feel the stock is worth what those share owners think it is worth - and there are a lot more of them. Maybe you should be more inclined to agree with them - unless you think you are smarter than the market and thus know the value better than it does. If you don't think you are smarter than it in the smart term and thus able to time your purchases and sales of equities/funds/markets why do you think you are smarter than it in the long term?

That proves that the market price is a minimum value, not the real value.

Not at all, all that proves is that in those cases there is a market buyer who values it more than the last buyer - heck that is what it means every time the next sale is higher. The real value at any given moment is what you can sell it for - plain and simple.


Exactly.


+1, finally a very sensible thought about value, and item or stock is worth at any given moment the amount that someone is willing to pay for it.....

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Re: U.S. stocks in freefall

Post by ginmqi » Thu Oct 16, 2014 4:44 am

garlandwhizzer wrote:Are we going into a bear market which is a more serious event, doing more damage and lasting longer? No one knows with certainty, but I believe not. Bear markets are generally associated with recessions and increasing unemployment. Data in aggregate suggests that a recession is not on the horizon in the US. Continuing GDP growth and improving employment numbers suggest that our economy slowly strengthening not weakening in spite of a few weak reports today. In short panic is not in order, rebalancing maybe, although personally I believe that higher rebalancing bands are more productive than lower ones. I'm staying the course.

Garland Whizzer


Political beliefs aside, my opinion is that current employment numbers are a bit un-realistic as a picture of the actual employment landscape....which from recent headlines and articles shows much under-employment and people dropping out of the workforce as well as wages stagnating.

With the current geopolitical and health issue (Ukraine, Syria/Iraq, Ebola, etc.) this could be a bear market trigger. Only time will tell.

I'm not worried though since I am a young investor.

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Re: U.S. stocks in freefall

Post by Ignatious P. Daily » Thu Oct 16, 2014 7:11 am

I see a lot of reasons we should be scared being shared by well-intentioned folks in this thread. I have not seen a single reason posted that is unique compared to the deluge of information from the Financial Media over - quite literally - the last 5 years. With no unique insight, how can any judgement be made on the direction of the market?

That said, fear is powerful. Far more so than greed. After a 5 year bull run, i believe what we are seeing in these threads are people who allowed their AA to become more aggressive than their actual tolerance. This is typical of an extended greed cycle. Please recognize the failings of human emotion here. Recognize that the issue is NOT the current market movements, but the lack of discipline over the past several years to rationalize ones portfolio to ever changing risk tolerance's. Reacting to fear now compounds the portfolio drag of that lack of discipline.

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Re: U.S. stocks in freefall

Post by DonCamillo » Thu Oct 16, 2014 8:27 am

ArthurO wrote:
DonCamillo wrote:
ArthurO wrote:a loss is a loss, of course, of course..... it is crazy I see so many threads discussing market losses, and people pretty much accept these, but when there are threads about people trying to buy things and actually enjoy the money, there seems to be so much resistance....

An unrealized loss is total nonsense. All a market price shows is the price that the most motivated seller is willing to offer a stock for. The reason that I hold the stocks I do is that I do not find the current price offered attractive enough to motivate me to sell my stocks. Since MOST of the shares of stock in the world are not bought or sold on any given day, that means that MOST share owners also feel that their stocks are worth more to them than the market is currently offering. If the vast majority of stock owners feel that their stocks are worth more than the market is offering, I am inclined to agree with them.

Look at a proposed buyout, such as the proposed CP purchase of CSX. The price is always much higher than the market price, because a buyer has to offer a price that most shareholders will accept, not the lowest price that anyone will accept. That proves that the market price is a minimum value, not the real value.


I wish you luck getting more than the market value for your holdings when you are ready to sell, (1) and good luck finding out what the company is actually worth... this is the most ridiculous thing I've ever heard, I got news for you, at any given moment whatever your value of your holdings in your account is, that's how much you will get when you are ready to sell, minus the fees if any, this mambo jumbo about real value and unrealized gains and losses is simply a mind game to justify and pacify market drops...

(1) You are assuming that I ever intend to sell. Stocks for me are a source of income, not merchandise in a store. I mostly buy and hold. After watching my father buy 50 shares of Pfizer in the 1960s at $75 a share and seeing that become 7,200 shares (stock splits without reinvestment of dividends) now selling at $29 a share and paying $1.04 annually in dividends, I see no reason to sell stocks. If I don't intend to sell, what my stocks are worth to other people is irrelevant. The only thing that matters is what they are worth to me. Sometimes, when I think my stocks are overvalued, like CSX right now, I will write out-of-the money covered calls on them, and occasionally I will misjudge the call price and have them sold out from under me. I just closed out a call on DuPont at a nice profit this week. But I do not intentionally sell unless I no longer want that stock. I have two stocks that I want to sell over the next couple of months because they pay unqualified dividends, and I am having to watch my tax bracket. I will replace them with index funds.

I also think it is wrong to compare people who own stock and do not want to sell it with people who do not want to buy it for the current price. The first category actually did something with the stock while the second category probably never even considered it and probably does not have any money to invest. The market value of the stock market is more closely related to the amount of money available for investment than it is to the long term value of the companies.
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Re: U.S. stocks in freefall

Post by C8H18Engineer » Tue Dec 02, 2014 9:33 am

kenner wrote:
C8H18Engineer wrote:
kenner wrote:Is the stock market decline permanent or temporary?

Have US companies announced that they are slashing their dividend payments?


If you look at divstat, you'll see the number of companies decreasing dividends is not looking good, approaching the levels seen around end of 2008. But who knows? This is just one indicator.

Code: Select all

Number of Companies Declaring Decreases  
       2013       2013       2012       2011       2010       2009       2008       2007
         28         44          6          8         14         62         16          3
         32         21          8          3         10         79          8          5
         31         73          6          4          6         81         14          5
                    21          9          6         10         76         16          4
                    18         11          5         10         64         19          4
                    20         13          3          2         38         18          1
                    14          5          6          7         35         21          4
                     6         17          1          6         28         23          3
                    20         23          6          9         16         28          3
                     6         26          5          8         12         37          2
                    15         27          6          2         22         53          5
                    16         93          7          4         14         42          5


Thank you C8, those stats do seem scary.

I hope this doesn't represent a trend for most US companies going forward, but I do not know to make that determination.


And now... in November it seems there is a record number of companies increasing dividends - 1773 according to Divstat, where the average per month is more like 132.

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Re: U.S. stocks in freefall

Post by nisiprius » Tue Dec 02, 2014 10:04 am

Oh, thank goodness. Whenever I see this thread bubble up again it makes me wonder if the market crashed when I wasn't looking.

Darn it all, made me look... high 17,000's. Whew. "There may come a day... but this is not that day." (Should I add, "not yet?")
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Re: U.S. stocks in freefall

Post by cfs » Tue Dec 02, 2014 10:22 am

Waiting, waiting, waiting,

“My message is as follows: Stocks stink and will continue to do so until they’re priced appropriately, probably somewhere around Dow 5,000, S&P 650, or Nasdaq God knows where.”

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Re: U.S. stocks in freefall

Post by Clearly_Irrational » Tue Dec 02, 2014 11:48 am

At the moment everything looks copacetic to me:

S&P 500 Price to Dividend ratio is still acting rationally
Leading indicator swirlogram suggests we're in slowdown rather than contraction
We're still within the one sigma range for NBER expansions
Latest composite crash indicator is 14.29/100 (readings over 30 are usually bad).
-Individual components of the indicator look fine for the most part
--Federal reserve is current holding flat
--USSLIND is positive
--FRED recession probability is only 0.22
--CFNAI-MA3 is within the normal range
--Schiller PE10 is elevated but not at irrational levels
--Yield curve is not inverted
--Dividend cuts are a bit high but not in warning status as of yet

From a technical perspective:
Bollinger bands are tightening but not yet in a squeeze
There has been a mild pullback which puts RSI back below overbought levels
MACD is widening and Chaikin Money Flow is decelerating
P&F target is bullish 2560
Most likely outcome is for a bit more pullback before a move later this month with the odds slightly favoring an upside surge however forecast accuracy is poor due to mixed signals

Overall it continues to look like the best plan is to do nothing. There is no evidence to suggest that buy and hold is not the best strategy at present.

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Re: U.S. stocks in freefall

Post by zaboomafoozarg » Tue Dec 02, 2014 11:53 am

nisiprius wrote:"There may come a day... but this is not that day."


This day, we relabance!

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Stay-the-course

Post by Taylor Larimore » Tue Dec 02, 2014 12:01 pm

Clearly Irritional:
There is no evidence to suggest that buy and hold is not the best strategy at present.

In my opinion, "buy and hold" is always the best strategy.
"Stay the course. No matter what happens, stick to your program. I've said "Stay the course" a thousand times and I meant it ever time. It is the most important single piece of investment wisdom I can give to you." -- Jack Bogle, in "Common Sense on Mutual Funds" (page 42).

Best wishes.
Taylor
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Re: U.S. stocks in freefall

Post by cfs » Tue Dec 02, 2014 12:02 pm

Clearly_Irrational wrote:There is no evidence to suggest that buy and hold is not the best strategy at present.

And this was true during the couple of days during the month of October 2014 when buy-2-hold won.
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Re: Stay-the-course

Post by Clearly_Irrational » Tue Dec 02, 2014 12:29 pm

Taylor Larimore wrote:In my opinion, "buy and hold" is always the best strategy.


Based on my reading the fact that the market is not normally distributed and that there are behavioral errors by the participants suggests that is only mostly true rather than all true There are possibly some exceptions that occur quite rarely but may indeed be actionable.To be clear, here is an abbreviated definition of what I'm talking about:

When the Federal Reserve has been strongly involved in the market for an extended time and valuations are at much higher than traditional levels the market crash process gets extended over a longer period than is usual. Due to this stretching effect forecasting signals can actually be received in time to be useful.

There have not yet been a sufficient number of these occurrences, only three so far, to know the optimal strategy during those time periods. Lacking evidence, the decision about what to do should another of those events happen again has to be made on an individual basis using whatever information and strategies that person is most comfortable with. For many investors a lack of trading skill and inability to stay calm during a crisis will mean that buy and hold will remain the best plan for practical reasons. Whether you choose to continue with buy and hold or some form of active response it's crucial that your plan be spelled out ahead of time. For me, this means a provision in my IPS detailing when I'm allowed to violate the normal buy and hold rules.

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